If the actual price level is lower than the expected price level reflected in long-term contracts,
a. the actual rate of unemployment will be less than the natural rate of unemployment.
b. the actual rate of unemployment will exceed the natural rate of unemployment.
c. the natural rate of unemployment will rise.
d. the natural rate of unemployment will fall.
B
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The assumption of short-run price stickiness implies:
a. that we must adjust nominal quantities for changes in inflation. b. that we must always allow for unexpected inflation. c. that expected inflation is zero and nominal quantities are the same as real. d. a balanced budget.
An increase in input productivity will:
A. shift the aggregate supply curve leftward. B. reduce the equilibrium price level, assuming downward flexible prices. C. reduce the equilibrium real output. D. reduce aggregate demand.